joel rothstein, paul hastings
Post on 03-Apr-2018
290 Views
Preview:
TRANSCRIPT
-
7/28/2019 Joel Rothstein, Paul Hastings
1/50
1
-
7/28/2019 Joel Rothstein, Paul Hastings
2/50
CHINA REAL ESTATEPOLICIESAND PROSPECTS
CHINA ROUNDTABLE
26 March 2013
Presented by:
Joel H. Rothstein
PartnerPaul Hastings LLP
-
7/28/2019 Joel Rothstein, Paul Hastings
3/50
THEPRESENTER
Joel Rothstein
Chair Beijing Office
of Paul Hastings
Head Asia Real
Estate Practice
15 Years in Asia
-
7/28/2019 Joel Rothstein, Paul Hastings
4/50
GOALSOF PRESENTATION
1. How has Chinas macro real estate policies evolved over the lastfew years? What is expected next?
2. In the current policy environment - what are the opportunities andchallenges currently facing foreign players that want to invest inChina?
3.In the current policy environment is there a meaningful role foroutbound investment?
-
7/28/2019 Joel Rothstein, Paul Hastings
5/50
AGENDA
Macro Policies
Foreign Investment
Outbound Investment
Q&A
-
7/28/2019 Joel Rothstein, Paul Hastings
6/50
MACRO POLICIESCooling and Heating
-
7/28/2019 Joel Rothstein, Paul Hastings
7/50
The Problem
-
7/28/2019 Joel Rothstein, Paul Hastings
8/50
Urbanization
Rising Wealth
Lack of Investment
Alternatives
Growth of Domestic
Developers
GFC Stimulus Policies
Local Govt. Policies
Activities of Trust
Companies
and PE Funds
Developments in
Debt/Equity
Capital Markets
-
7/28/2019 Joel Rothstein, Paul Hastings
9/50
The Policy Response
-
7/28/2019 Joel Rothstein, Paul Hastings
10/50
The Policy Response
THE PHASES
Phase One
Cooling
(2009-2011)
Phase Two
Cooling/Heating(2011-2013)
Next Phase
Cooling/Heating
(more or less)
-
7/28/2019 Joel Rothstein, Paul Hastings
11/50
Phase One: How to Cool a Market
Chilly Limits on multiple residence purchases
Cool Stricter mortgage qualification requirements/higher down payments
Frigid Property tax pilot programs
Icy Limit bank financing to developers
Glacial Crack-down on informal lending market
ArcticActually enforce laws on books
-
7/28/2019 Joel Rothstein, Paul Hastings
12/50
Phase Two : Dual PolicyCooling and Heating
> Deflate Bubble
> Housing Affordability Social Harmony
> Tame Inflation
> Banking System Risk
> Rational/Efficient Land Use
> Stable Economic Growth
> Housing and Other Policy Goals
> Local Government Forces
Cooling
Heating
-
7/28/2019 Joel Rothstein, Paul Hastings
13/50
The Next Phase
More of the
SameHeating and cooling of
varying degrees.Goals: Guide HealthyDevelopment andStabilization of Market.
Heating
Cooling
-
7/28/2019 Joel Rothstein, Paul Hastings
14/50
The Next Phase:Notice of the State Council on Continuing to Effectively Regulate
the Real Estate Market (26 February 2013)
Local Government Controls-Policies
Each province and major city must announce its real estate market control target (i.e.average unit price should rise no more than X% yoy). For those local governments
which cannot control price rise, the official in charge will be held accountable.
Limits on Ownership of Multiple Residences
Capital Gains Tax
Mortgage Loan Restrictions
Development Land
Zoning Affordable Housing
-
7/28/2019 Joel Rothstein, Paul Hastings
15/50
The Next Phase:Notice of the State Council on Continuing to Effectively Regulate
the Real Estate Market (26 February 2013)
Local Government Controls-Policies
Limits on Ownership of Multiple Residences
Individual buyers non-local residents (without Hu Kou) cannot buymore than one housing unit in major cities.
Capital Gains Tax
Mortgage Loan Restrictions
Development Land
Zoning Affordable Housing
-
7/28/2019 Joel Rothstein, Paul Hastings
16/50
The Next Phase:Notice of the State Council on Continuing to Effectively Regulate
the Real Estate Market (26 February 2013)
Local Government Controls-Policies
Limits on Ownership of Multiple Residences
Capital Gains Tax
20% income tax imposed on capital gain arising from sale of a housingunit.
Mortgage Loan Restrictions
Development Land
Zoning Affordable Housing
-
7/28/2019 Joel Rothstein, Paul Hastings
17/50
The Next Phase:Notice of the State Council on Continuing to Effectively Regulate
the Real Estate Market (26 February 2013)
Local Government Controls-Policies
Limits on Ownership of Multiple Residences
Capital Gains Tax
Mortgage Loan Restrictions
Banks to raise down payment requirements and mortgage loan rates forsecond home purchases if the housing price of the relevant jurisdiction
rises rapidly.
Development Land
Zoning Affordable Housing
-
7/28/2019 Joel Rothstein, Paul Hastings
18/50
The Next Phase:Notice of the State Council on Continuing to Effectively Regulate
the Real Estate Market (26 February 2013)
Local Government Controls-Policies
Limits on Ownership of Multiple Residences
Capital Gains Tax
Mortgage Loan Restrictions
Development Land
Local governments should make land parcels available for development toincrease supply.
Zoning Affordable Housing
-
7/28/2019 Joel Rothstein, Paul Hastings
19/50
The Next Phase:Notice of the State Council on Continuing to Effectively Regulate
the Real Estate Market (26 February 2013)
Local Government Controls-Policies
Limits on Ownership of Multiple Residences
Capital Gains Tax
Mortgage Loan Restrictions
Development Land
Zoning Affordable Housing
Provide fast-track approvals for real estate projects focusing on small andmedium size residential units. 11 million affordable housing units in 2013.
-
7/28/2019 Joel Rothstein, Paul Hastings
20/50
Macro Real Estate Policies
What does it all meanfor the foreign realestate investor?
-
7/28/2019 Joel Rothstein, Paul Hastings
21/50
FOREIGN INVESTOROPPORTUNITIES ANDCHALLENGES Foreign Investor Regulatory Regime Specialty Real Estate Investment
-
7/28/2019 Joel Rothstein, Paul Hastings
22/50
Foreign Investor
RegulatoryRegime
-
7/28/2019 Joel Rothstein, Paul Hastings
23/50
Foreign Investor Regulatory Regime
Starting in 2006 laws/regulations have been enacted to make it moredifficult to directly invest in China real estate CIRCULAR 171.
All direct foreign investment into Chinese real estate is subject to acomplex regulatory approval regime ALL DEALS MUST BEAPPROVED BY THE GOVERNMENT.
Real Estate Foreign Invested Enterprise (FIE) approvalsmultiple agencies/steps
In last two to three years no major changes in foreign investorlaws/regulations involving real estate FIEs.
-
7/28/2019 Joel Rothstein, Paul Hastings
24/50
Foreign Investor Regulatory Regime
THE DOOR
Sometimes more opensometimes more closed.
-
7/28/2019 Joel Rothstein, Paul Hastings
25/50
In or Out
IN
Specialty RealEstate
PE FundInitiatives
OUT
High-EndResidential
SpeculativeStrata Title Deals
High-End Officevary by location
IN
OUT
-
7/28/2019 Joel Rothstein, Paul Hastings
26/50
SpecialtyReal EstateInvestment
-
7/28/2019 Joel Rothstein, Paul Hastings
27/50
Specialty Real Estate Investment: Types
Affordable Housing
Mixed Use Development
Senior Living
Healthcare
Bio-Technology and Research
Logistics and Warehouse Facilities
-
7/28/2019 Joel Rothstein, Paul Hastings
28/50
Specialty Real Estate Investment:Common Features
Promotes government policies a good fit
Economic development impacts beyond project
Non-real estate real estate project
-
7/28/2019 Joel Rothstein, Paul Hastings
29/50
OUTBOUND INVESTMENT:NEW FRONTIERS The General Policy Outbound Investment Approvals
Key Types
-
7/28/2019 Joel Rothstein, Paul Hastings
30/50
YAP
-
7/28/2019 Joel Rothstein, Paul Hastings
31/50
Yap
An island in the in theWestern Pacific
101 square kilometers
Population: 11,000
-
7/28/2019 Joel Rothstein, Paul Hastings
32/50
Yap
Deng Hong Chinesereal estate developer
Proposed
Development 4,000 room casino and
golf resort
Infrastructure
improvements Cost: US$1billion++
-
7/28/2019 Joel Rothstein, Paul Hastings
33/50
The General Policy
-
7/28/2019 Joel Rothstein, Paul Hastings
34/50
The General Policy
Go Global!!
Chinas 12th Five Year plan and recent regulatory developments confirm
Chinas determination to realize its go global policy and enlarge thescale of overseas investment.
The governments announced intention is to encourage domestic
enterprises to look outbound to:
Gain access to new markets and advanced technologies Secure energy, mineral and precious natural resources
Tap opportunities in distressed markets in Europe and the UnitedStates.
Expand sphere of influence.
-
7/28/2019 Joel Rothstein, Paul Hastings
35/50
The General Policy
Recent Legislative Developments
Law/Policy Agency Date Plan for the Utilization of Foreign Capital and Overseas Investment in the 12th Five-Year Plan
PeriodNDRC July 2012
Notice on Relevant Foreign Exchange Issues in Relation to Encouraging and Guiding the HealthyDevelopment of Private Investment
SAFE July 2012
Implementation Opinions on Encouraging and Guiding Private Enterprises in Actively InvestingAbroad
NDRC, MOFCOM,MFA, PBOC,CBRC, CSRC,SAFE, etc.
June 2012
Notice of the General Office of the State Council on Forwarding the Guiding Opinions of theNational Development and Reform Commission and Other Relevant Departments on Accelerating
the Cultivation of New Advantage in International Cooperation and Competition
General Office ofthe State Council
May 2012
Interim measures for the Supervision and Administration of Outbound Investments by CentralState-Owned Enterprises
SASAC May 2012
Measures for Administration of Verification and Approval of Overseas Investment Projects NDRC Draft IssuedPending Final
Approval
-
7/28/2019 Joel Rothstein, Paul Hastings
36/50
The General Policy
Recent Legislative Developments - Impacts
Points to trend of simplifying and relaxing the approval regime.
Increasing delegation of approvals to lower level provincial authoritiesaway from central government authorities.
Emphasis that the projects commercial aspects (economic feasibility,
profitability etc.) should be determined by the investor on its own and not
by the government approval authorities.
-
7/28/2019 Joel Rothstein, Paul Hastings
37/50
The General Policy
Policy vs. Reality
Caution:
While current policies aremaking outbound investmenteasier there is still acomprehensive legal approvalprocess that needs to be
complied with.
-
7/28/2019 Joel Rothstein, Paul Hastings
38/50
The General Policy
Policy vs. Reality
Policy:Go Global
Reality:Chinese outbound investments are
subject to a restrictive regulatory
onshore regime
-
7/28/2019 Joel Rothstein, Paul Hastings
39/50
Outbound
InvestmentApprovals
-
7/28/2019 Joel Rothstein, Paul Hastings
40/50
Outbound Investment Approvals
Introduction
China has a comprehensive regulatory regime governing outboundinvestment by Chinese parties.
There is no one outbound investment law instead there are a variety oflaws and regulations which need to be consulted.
No one approval authority controls. Multiple governmental authorities are
involved.
-
7/28/2019 Joel Rothstein, Paul Hastings
41/50
Outbound Investment Approvals
Potential Approval and Review Authorities
SAFEState Administrationof Foreign Exchange
NDRCNational Developmentand Reform Comm.
MOFCOMMinistry ofCommerce
SASACState-Owned Assets
Supervision & AdministrationCommission
General
SOEs
Industry Specific CSRCChina Securities
Regulatory Comm.
CBRCChina Banking
Regulatory Comm.
CIRCChina Insurance
Regulatory Comm.
MOFMinistry ofFinance
MOCMinistry of
Construction
OtherMinistry of CultureMinistry of Health
Etc.
-
7/28/2019 Joel Rothstein, Paul Hastings
42/50
Outbound Investment Approvals
Approval Process
-
7/28/2019 Joel Rothstein, Paul Hastings
43/50
Types of OutboundInvestment Activity
-
7/28/2019 Joel Rothstein, Paul Hastings
44/50
Types of Outbound Investment Activity:Players
CIC: China Investment CorporationSAFE: State Administration of Foreign ExchangeNSSF: National Social Security Fund
Sovereign WealthFunds
PRC Insurance CompaniesQDIIs Funds and others
Emerging InstitutionalInvestors
Offshore listed large developersSmall developersPRC Developers
M&A driven companiesSOEs and Corporates
Individuals with access to offshore bank accounts and companiesEntrepreneurs
CDB: China Development BankChina EXIM: China Export Import BankDebt Providers
-
7/28/2019 Joel Rothstein, Paul Hastings
45/50
Types of Outbound Investment Activity:The Deals
FUNDINVESTMENTS
and REALESTATE
SECURITIES
SovereignWealth Funds
EmergingInstitutional
Investors
Entrepreneurs
SEPARATEACCOUNTS
SovereignWealth Funds
EmergingInstitutional
Investors
Entrepreneurs
DEVELOPMENT
PRCDevelopers
Debt Providers
JOINTVENTURES
EmergingInstitutional
Investors
PRCDevelopers
Entrepreneurs
DIRECTACQUISITIONS
SOEs andCorporates
EmergingInstitutional
Investors
Entrepreneurs
DEBT
Debt Providers
-
7/28/2019 Joel Rothstein, Paul Hastings
46/50
A Chinese Proverb
There are many paths to the top of a mountain
but the view is always the same..
-
7/28/2019 Joel Rothstein, Paul Hastings
47/50
Q&A
Questions and Answers
-
7/28/2019 Joel Rothstein, Paul Hastings
48/50
PRESENTER
Joel H. Rothsteinis a partner with the international law firm of Paul Hastings LLP and is based in the firms
Beijing and Tokyo offices. His practice focuses on real estate, banking and structured finance. He serves as
Vice Chairof the Beijing office and head of the firms Asia real estate practice.
With over fifteen years' experience serving clients in Asia, Mr. Rothstein is the firms longest serving real
estate attorney in Asia where he has played a leading role in the establishment and expansion of the firms
market leading real estate practice in the region. In his practice, he routinely advises and assists
international and domestic investment banks, financial institutions, private equity funds, and real estate
developers and investors in Asian as well as in other global markets in the following areas:
real estate venture formation and fund vehicle formation and management;
real estate and other asset-based financing;
asset securitization and secondary market trading of loan assets;
real estate debt and equity capital market transactions, including REITS;
NPL and hard asset portfolio acquisitions and dispositions; distressed asset and company restructuring and workouts;
property acquisitions and dispositions;
construction and development; and
hotel and resort finance, development and management.
Mr. Rothstein has participated in structuring, documenting and implementing a number of landmark
transactions and investment programs in both the United States and in Asia, including the first NPL
securitization transactions completed both in the United States and Japan, cross-border joint ventures, and
innovative conduit lending and non-recourse real estate financing programs in the United States, China,Japan and Korea.
In addition to being a lawyer, Mr. Rothstein is also an architect and urban designer and a graduate of
Columbia University's Graduate School of Architecture. He has previously worked on a number of
architecture and urban design projects in diverse locations ranging from Cartegena, Colombia, South
America, New York City and Los Angeles. Mr. Rothstein received his J.D. degree from New York University
School of Law and was the editor of the publication New York University Review of Law and Social Change .
Mr. Rothstein is a frequent lecturer and author on real estate finance and Asia real estate investment.
Joel H. Rothstein
Partner
Paul Hastings LLP
19/F Yintai Center office Tower2 Jianguomenwai Avenue
Chaoyang District
Beijing 100022
PRC
t: +86.10.8567.5380
f: +86.10.8567.5400
joelrothstein@paulhastings.com
-
7/28/2019 Joel Rothstein, Paul Hastings
49/50
www.paulhastings.com 2012 Paul Hastings LLP Confidential not for redistribution
50
-
7/28/2019 Joel Rothstein, Paul Hastings
50/50
top related